R3: new buyers outstrip ad holding companies in booming M&A market

Global agency and marketing services deals were up by 88 per cent by value in the first half of 2018, according to new research by marketing consultancy R3. This was largely driven by new buyers (including consultancies) to the sector and marTech companies. 39 major deals were completed.

R3 principal Greg Paull says: “It’s clear that the consulting firms aren’t slowing down, Accenture invested more in M&A than the top two holding companies – Dentsu and Omnicom – combined. But the real story in the first half of this year has been the unconventional buyers. We are seeing brands like L’Oreal, Cars.com and AT&T becoming active in the marketing M&A space to invest in and build up internal capabilities.”

North America saw an increase of 171 per cent, with the deal value increasing to $6,603m over $2,428m from the same time last year. North America’s deal value increase was driven largely by AT&T’s acquisition of programmatic ad marketplace AppNexus.

In terms of number of deals, only three holding groups made more acquisitions so far this year than in the first half of 2017 – Omnicom, Hakuhodo and Iinterpublic. The three holding groups also saw larger deal sizes in the first six months of this year – $204m for Omnicom, $132m for Hakuhodo and $42m for IPG. The two most traditionally aggressive holding companies in the M&A space, Dentsu and WPP, saw year-on-year decreases in both number of deals and deal value in the period.

IPG’s purchase of Acxiom’s Marketing Services business was not included in this round of tracking since it occurred in July. However it does signify a growing need to holding companies to bolster their data & analytics capabilities to meet client expectations.

Similarly Sir Martin Sorrell’s S4 Capital’s successful €300m buy of Holland’s MediaMonks occurred this month.

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